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Section 32AC was inserted by the Finance Act, 2013 w.e.f. A.Y.2014-15 to provide
a tax incentive by way of investment allowance to encourage huge investment in
plant or machinery.
under section 32AC has been extended for investment made in plant and machinery up
to 31.03.2017.
Further, in order to rationalize the existing provisions of section 32AC and also to
make medium size investments in plant and machinery eligible for deduction, new
sub-section (1A) has been inserted to provide that deduction under section 32AC
would be available if the company, on or after 1st April, 2014, invests more than `
25 crore in plant and machinery in a previous year.
(vi) Companies which are eligible to claim deduction under the existing combined
threshold limit of more than ` 100 crore for investment made in previous years
2013-14 and 2014-15 shall continue to be eligible to claim deduction under section
32AC(1), even if its investment in the year 2014-15 is below the new threshold limit
of investment of ` 25 crore.
(vii) New plant or machinery does not include
(1) any plant or machinery which before its installation by the assessee was used
either within or outside India by any other person;
(2) any plant or machinery installed in any office premises or any residential
accommodation, including accommodation in the nature of a guest house;
(3) any office appliances including computers or computer software;
(4) any vehicle;
(5) ship or aircraft; or
(6) any plant or machinery, the whole of the actual cost of which is allowed as
deduction (whether by way of depreciation or otherwise) in computing the
income chargeable under the head Profits and gains of business or
profession of any previous year.
Example
Compute the admissible deduction under section 32AC
A.Y.2014-15 & A.Y.2015-16 in each of the following cases Manufacturing company
A Ltd.
B Ltd.
C Ltd.
D Ltd.
E Ltd.
F Ltd.
for
80
70
60
75
105
70
P.Y.2014-15
22
25
30
25
15
30
G Ltd.
70
40